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While consumers seem cheered by the recent improvements in the housing market, a prominent Fed official shook markets Tuesday by saying he doubts the Fed program announced last week to purchase $40 billion a month of mortgage securities will do much to help housing or the economy.

“I believe that increasing monetary policy accommodation is neither appropriate nor likely to be effective in the current environment,” Federal Reserve Bank of Philadelphia President Charles Plosser told a gathering in Philadelphia.

Wall Street markets, which had been rallying on the upbeat morning news about the economy, plummeted on Mr. Plosser’s remarks in afternoon trading. The Dow Jones industrial average lost 101 points to close at 13,457.55, in its worst sell-off in three months.